Covestro Accepts Takeover Bid from ADNOC
German chemicals group Covestro has announced that it has accepted a takeover bid from the UAE state energy company ADNOC. This move comes at a crucial time for one of the key sectors in Europe’s largest economy, which is currently facing a crisis.
Deal Details
- The deal values Covestro, a leading maker of plastics, at approximately 12 billion euros ($13.3 billion).
- ADNOC will make an offer for all remaining Covestro stock at a price of 62 euros per share, under a valid agreement until the end of 2028.
- ADNOC will inject around 1.2 billion euros into Covestro through the issuance of new shares once the deal is finalized.
Benefits of the Deal
With ADNOC’s involvement, Covestro aims to establish a stronger foundation for sustainable growth. The German group’s CEO, Markus Steilemann, emphasized that ADNOC is a financially strong and long-term oriented partner, which bodes well for Covestro’s future.
Challenges Facing the Chemicals Industry
The German chemicals industry has been grappling with weak demand and high energy costs following the Russian invasion of Ukraine. This has led to production cutbacks and challenges for companies like BASF, the world’s largest chemicals group.
Strategic Transformation
Covestro has been undergoing a strategic transformation to adapt to the changing market conditions. The group has unveiled a savings plan and is focused on enhancing its competitiveness in the industry.
ADNOC’s Diversification Strategy
The takeover of Covestro marks a significant diversification move for ADNOC, as it looks to expand beyond its traditional oil operations. This acquisition aligns with ADNOC’s vision to become a top global chemicals company and diversify its portfolio.
Recommendation to Shareholders
Covestro’s board has indicated that it will recommend shareholders to accept ADNOC’s offer under the terms of the agreement. The deal is seen as beneficial for both companies and aligns with their long-term strategic goals.
Overall, the takeover bid from ADNOC represents a strategic move that could have a lasting impact on the chemicals industry in Germany and beyond. By joining forces, Covestro and ADNOC aim to navigate the current challenges in the market and position themselves for sustainable growth in the future.